California starts tackling huge affordable housing shortage

FILE - In this Friday, Aug. 18, 2017 file photo, builders work on an apartment complex in Sacramento, Calif. Gov. Jerry Brown will sign on Friday, Sept. 28, 2017, a package of bills aimed at tackling California's affordable housing crisis. Lawmakers and advocates cheer the package as the most significant housing policy to come out of Sacramento in years. (AP Photo/Rich Pedroncelli, File)

SAN FRANCISCO — Gov. Jerry Brown put his signature Friday on bills aimed at tackling the affordable housing crisis in California, which needs an estimated 1.5 million more homes and apartments to satisfy demand from those priced out of the soaring market.

Brown signed the 15 bills in San Francisco, where the need is especially acute. An average one-bedroom apartment there rents for more than $3,000, and the median home price is about $1.5 million.

The legislative package, hammered out during months of negotiations and passed by lawmakers as the session ended earlier this month, would funnel new money from a ballot initiative and a real estate transaction fee toward subsidizing low-income housing projects and roll back regulations that have slowed construction in many areas.

Senate leader Kevin de Leon and Los Angeles Mayor Eric Garcetti, both Democrats, were among a throng of lawmakers and housing advocates who cheered Brown on the manicured lawn of a San Francisco affordable housing complex in Hunter’s Point, an impoverished, crime-ridden neighbourhood the city hopes to transform over the next decade into an affordable housing hub.

Brown acknowledged the bills only begin to tackle the problem, a sentiment echoed by many.

“We cannot move past today and just check the box, say we’ve done housing and move onto something else,” said Sen. Scott Wiener, a San Francisco Democrat who sponsored one of the bills. “When you spend 50 years driving your car into a ditch that means it’s a really deep ditch.”

The contrast in home and rental prices between California and the rest of the nation is stark. Median home prices are about double the national mark, and rents are 50 per cent higher.

For decades, California has failed to build enough units to meet demand, particularly in popular coastal cities such as San Francisco. The state needs to build 100,000 additional affordable units annually just to keep up with demand, according to a Legislative Analyst’s Office report.

State estimates predict the laws will only build up to 90,000 new units in the next 10 years.

And there’s still one more step to finalize the main source of cash: The $4 billion housing bond authorized in one of the bills needs approval from voters in 2018.

“We just celebrated putting it on the ballot, not that it’s there,” Garcetti said. “They better get back to work as soon as they get back to Sacramento because Californians don’t think signing any of these pieces of paper is much relief for them today.”

If approved, the bond will set aside $1 billion for veterans housing and spend much of the rest to subsidize building low-income units.

It costs about $300,000 to build one affordable unit, and the state can contribute about $60,000 through housing programs, said Matt Schwartz, president of the California Housing Partnership.

“There are dozens of affordable housing developments waiting in a queue for state funding that hasn’t existed,” he said, speaking about proposed projects in San Francisco.

The second funding source, a new $75 fee on real estate transaction documents, is expected to generate between $200 and $300 million annually. In the first year, that money will go to helping homeless people and to help communities update their zoning, planning and other housing-related laws to prepare for more building. After that, local communities can use it to aid building projects.

That’s far less than the $1 billion the state used to spend on housing through a redevelopment program Brown ended in 2012 to help balance the state budget.

San Francisco approved its own $310 million bond for affordable housing in 2015, displaying just how expensive it is to tackle the housing crisis.

“We need to get to a scale that meets the challenge that we’re facing,” said Amie Fishman, executive director of the Non-Profit Housing Association of Northern California. “Housing is fundamentally what makes people be able to live and go to work and feed their children.”

Fishman noted 74 per cent of San Francisco voters backed that bond, displaying a potential appetite among Californians to tackle the housing crisis. But building under that bond is still in the planning stages. The city issued $75 million in those bonds in October 2016, with the money split between public, low-income and middle-income housing.

Democratic Sen. Nancy Skinner of Berkeley said several bills aim to put a stop to “NIMBY,” or “not in my backyard,” culture that keeps some cities from building more housing that low-income people can afford. One bill gives cities legal cover to require “inclusionary housing,” meaning developers must include low- and middle-income units alongside market-rate ones.

Others aim to stop cities from slowing down building projects by tying them up in environmental or other regulations.

“Getting a permit to build housing should not be a shell game,” Skinner said. “It should happen if you meet the rules.”